What is VFC's Intrinsic value?

VF Corp (VFC) Intrinsic Value Analysis

Executive Summary

As of June 29, 2025, VF Corp's estimated intrinsic value ranges from $8.06 to $36.84 per share, depending on the valuation methodology applied.

Valuation Method Fair Value (USD) Implied Upside/Downside
Discounted Cash Flow (10Y) $36.84 +211.1%
Discounted Cash Flow (5Y) $31.56 +166.5%
Dividend Discount Model (Multi-Stage) $15.01 +26.7%
Dividend Discount Model (Stable) $8.06 -32.0%
Earnings Power Value $25.12 +112.2%

Is VF Corp (VFC) undervalued or overvalued?

With the current market price at $11.84, the stock appears to be significantly undervalued.

Understanding Intrinsic Value

Intrinsic value represents the "true" worth of a company based on its fundamentals rather than market sentiment. We've employed multiple methodologies to triangulate VF Corp's intrinsic value, including:

  1. Discounted Cash Flow (DCF): Values the company based on projected future cash flows
  2. Dividend Discount Model (DDM): Values the company based on expected future dividend payments
  3. Earnings Power Value (EPV): Values the company based on its current earnings power, assuming no growth

Weighted Average Cost of Capital (WACC)

The cost of capital is a critical factor in valuation models, representing the required return for investors.

WACC Component Low High
Long-term bond rate 3.9% 4.4%
Equity market risk premium 4.6% 5.6%
Adjusted beta 0.59 1.04
Cost of equity 6.6% 10.7%
Cost of debt 4.0% 5.1%
Tax rate 26.2% 27.0%
Debt/Equity ratio 0.86 0.86
After-tax WACC 4.9% 7.5%

Valuation Methods

1. Discounted Cash Flow (DCF) Valuation

Our DCF model projects cash flows over 5-year and 10-year horizons, with the following key assumptions:

  • Forecast Period: 5-year DCF and 10-year DCF
  • Terminal Growth Rate: 0.0% (range: 3.0% - 5.0%)
  • Discount Rate: 6.2% (range: 0.0% - 9.3%)

Key Projections:

  • Revenue growth from $9,505 (FY03-2025) to $12,416 (FY03-2035)
  • Net profit margin expansion from 1% to 4%
  • Capital expenditures maintained at approximately 2% of revenue
DCF Model Fair Value Enterprise Value % from Terminal Value
5-Year Growth $32 $15,848M 88.7%
10-Year Growth $37 $17,907M 78.5%
5-Year EBITDA $10 $7,467M 76.0%
10-Year EBITDA $14 $9,119M 57.7%

2. Dividend Discount Model (DDM)

The DDM values a company based on its expected future dividend payments. We used two approaches:

Multi-Stage DDM:

  • Current payout ratio: 86.7%
  • Stable payout ratio: 90.0%
  • Growth transition: 5 years
  • Cost of equity: 8.6%
  • Long-term growth rate: 3.5%
  • Fair value: $15.01 (26.7% from current price)

Stable DDM:

  • Stable payout ratio: 70% (Low) to 90% (High)
  • Cost of equity: 10.7% (Low) to 6.6% (High)
  • Long-term growth rate: 2.5% (Low) to 4.5% (High)
  • Fair value range: $3 to $13
  • Selected fair value: $8.06 (-32.0% from current price)

3. Earnings Power Value (EPV)

EPV assesses a company's value based on its current normalized earnings power, assuming no growth.

EPV Component Value
Normalized Earnings $789M
Discount Rate (WACC) 7.5% - 4.9%
Enterprise Value $10,576M - $16,103M
Net Debt $3,549M
Equity Value $7,027M - $12,554M
Outstanding Shares 390M
Fair Value $18 - $32
Selected Fair Value $25.12

Key Financial Metrics

Metric Value
Market Capitalization $4615M
Enterprise Value $8163M
Trailing P/E 38.03
Forward P/E 25.71
Trailing EV/EBITDA 8.20
Current Dividend Yield 227.87%
Dividend Growth Rate (5Y) -34.75%
Debt-to-Equity Ratio 0.86

Investment Decision Framework

To determine the most reliable intrinsic value estimate, we weigh each valuation method based on:

  1. Forecast Certainty: DCF methods rely on long-term projections, while earnings power value focuses on current normalized earnings
  2. Business Model Alignment: Dividend models are more appropriate for mature companies with established dividend policies
  3. Historical Accuracy: How well each method has predicted fair value historically

Valuation Weight Matrix

Valuation Method Weight Weighted Value
Discounted Cash Flow (10Y) 30% $11.05
Discounted Cash Flow (5Y) 25% $7.89
Dividend Discount Model (Multi-Stage) 20% $3.00
Dividend Discount Model (Stable) 15% $1.21
Earnings Power Value 10% $2.51
Weighted Average 100% $25.66

Investment Conclusion

Based on our comprehensive valuation analysis, VF Corp's weighted average intrinsic value is $25.66, which is approximately 116.7% above the current market price of $11.84.

Key investment considerations:

  • Strong projected earnings growth (1% to 4% margin)
  • Consistent cash flow generation

Given these factors, we believe VF Corp is currently significantly undervalued with the potential for long-term appreciation based on the company's growth trajectory and financial strength.